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Friday, 18 September 2015 00:00 - - {{hitsCtrl.values.hits}}
A customer looks at merchandise in a Best Buy store in Denver – REUTERS
US consumer spending grew at a fairly healthy pace over the past two months, pointing to underlying strength in domestic demand that could strengthen the case for the Federal Reserve to hike interest rates on Thursday.
While other data on Tuesday showed continued weakness in manufacturing, economists said that was unlikely to have much impact on the US Central Bank’s decision whether to raise rates for the first time in nearly a decade.
“Looking at the data alone, Fed officials will probably say, yes, the conditions are right to tighten. If it were not for the increase in financial stress, they would be tightening this month,” said Jeremy Lawson, chief economist at Standard Life Investments in Edinburgh.
The Commerce Department said retail sales excluding automobiles, gasoline, building materials and food services increased 0.4% in August after an upwardly revised 0.6% increase in July.
These so-called core retail sales, which correspond closely to the consumer spending component of gross domestic product, provided the latest sign of sturdy economic momentum and suggested the recent stock market sell-off had little immediate impact on U.S. household spending.
US stocks were trading higher and the dollar strengthened against a basket of currencies. Prices for US Government bonds fell.
The Fed’s policy-setting committee meets on Wednesday and Thursday against the backdrop of a tightening US labor market, low inflation and slowing global growth. The Fed’s benchmark overnight interest rate has remained near zero since December 2008.
